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Globalization and Human Developmentachieve further progress and refinement.However, change and evolution are the only‘constants’ of life. Civilizations that do notbenefit from change deteriorate and possiblyvanish. However, introducing change todifferent cultures and civilizations shouldnot mean giving up their distinctive identity.Indeed, achieving the right balance betweenevolution and authenticity is considered oneof the great challenges confronting statesfacing the new wave of globalization.From the economic perspective, there seemsto be a general agreement that globalizationrefers mainly to trade liberalization, dependenceon market forces, predominance of theprivate sector and the privatization of publicenterprises. This should lead to the freemovement of goods, individuals and capitalflows; and hence to a greater mutualinterdependence between the economies ofdifferent states, within the framework ofreduced barriers to financial and commodityflows.Globalization: Opportunities andThreatsAs mentioned earlier, the proponents ofglobalization herald the economic gains andbenefits that will accrue from this new trendto developing countries and to the industrialworld alike. However, its opponentsanticipate great harm for developingcountries in particular, threatening themwith the closing down of factories,widespread unemployment, and the inabilityto compete with other countries’ goods andservices in their own local markets,notwithstanding fierce competition inexternal markets. It is difficult to side witheither group. A balanced viewpoint wouldsuggest that globalization, like any otherprocess, combines both opportunities andthreats, as shown below.OpportunitiesIt is possible for Egypt and other developingcountries to achieve gains from globalization,derived essentially from widening the scopeof the market within the framework ofeconomic liberalization. The most importantpotential gains are:● Production Efficiency: Developingcountries can establish larger scaleproduction units in order to benefit fromthe enlarged market opportunities, thusbenefiting from comparative andcompetitive advantages. This could leadto the re-organization of the internationaldivision of labor and specialization;thereby increasing world economicprosperity through trade creation, as theeconomic theory predicted.● Consumer Welfare: It is expected that,due to globalization, and the resultingeffects of the reduction of customs dutiesand other trade barriers on the flow ofinternational trade, the prices ofconsumerable commodities will bereduced, thus increasing consumer welfare.● Increased Competition: There is nodoubt that globalization would increasethe degree of beneficial competition, orinnovative arrangements, among differentproducers. This would lead to thesurvival of the fittest, thus achievingefficiency in the field of exchange.● The Importance of Innovation: Asemphasized by Schumpeter, innovation isimportant in bringing about evolution andprogress. With the current speed ofinformation technology, it is expectedthat developing countries would benefitfrom these innovations. However, sincebound by intellectual property rights,these countries have to bear certaincharges in order to be able to use suchinnovations.● Gains from Free Capital Movements: Itis now widely accepted that foreign directinvestment is considered one of theessential driving forces of acceleratedeconomic growth, as attested from theexperience of the South-East Asiancountries. Globalization allows otherdeveloping countries the opportunity tobenefit from free capital movements,provided they offer an attractive localenvironment conducive for this kind ofinvestment. Furthermore, the rapidmovement of portfolio investments mayenable developing countries to mobilizeinternational savings. They furtherstimulate the development of emergingcapital markets.Civilizations that donot benefit fromchange deteriorate andpossibly vanish.Introducing change todifferent cultures andcivilizations shouldnot mean giving uptheir distinctiveidentity.Egypt Human Development Report 2000/2001 - 11